An important distinction to make in the aid debate is between relief aid, which is about providing a stop-gap social safety net in developing countries, and development aid, which is about creating the conditions where sustainable economic development can occur. AusAID and Australian NGOs do a reasonable job at the first type of aid (with our limited resources), and a bloody terrible job at the second type.

I'll talk more about development aid in a minute, but it's first important to recognise that relief aid is an important and valuable function of our aid program. Where developing country governments fail to provide the basic social services that make human life bearable, developed countries like Australia have a duty to assist. In Papua New Guinea for example, this has meant that Australia has played a crucial role in slowing the growth of the HIV/AIDS pandemic, and in helping expand access to primary education.

Aid sceptics ignore this when they make their most common arguments about the 'failure of aid'. They point to the fact that, after decades of effort and hundreds of billions of dollars spent, little has changed in the poorest countries. This is intellectually dishonest.

What needs to be looked at is the counterfactual — ie. what would have happened if we hadn't provided assistance? When discussing the supposed failure of Australian aid in PNG, Alexander Downer says that he disagrees with the sceptics because PNG living standards would have been so much worse without Australia's involvement. The reality is that people in desperately impoverished communities need assistance to meet their basic human needs, and this is a legitimate role for Australian aid.

The second type of aid, development aid, is where I believe the most fruitful debate can take place. The question here is, how best can the Australian Government and Australian NGOs & businesses create the conditions for economic growth in poor countries? I would argue that very little Australian aid achieves anything in this area at the moment, in large part because this is such a difficult question.

Three areas of opportunity that I can see. First, labour mobility. It's extremely unfortunate that the Australian guest worker scheme, established in 2008, has been such a dismal failure; a similar scheme in New Zealand has proved to be highly effective at achieving lasting development outcomes for a number of Polynesian communities. An independent evaluation of the NZ scheme found the program benefited social cohesion, in that unemployed young Polynesians were given job opportunities, it benefited Polynesian families back home as workers remitted much of their income, and it had a long-term benefit for the Polynesian economy in that returning works brought increased skills with them.

The second opportunity is in trade. Pacific countries, the focus of Australia's aid program, must find ways to achieve faster export-driven growth, and in areas other than resource extraction. Agriculture seems to the the natural choice, however there are a number of factors holding Pacific countries back from growing agricultural exports. Infrastructure is a big one, and an area where Australian aid can play a significant role. There could be opportunities for Australia to leverage China's growing role in the Pacific, considering that Chinese aid has been particularly beneficial in building large infrastructure in some African countries. Another barrier to Pacific agricultural exports is Australia's very high quarantine standards. These standards are obviously important to maintaining Australian food safety and public health, however we must be careful that quarantine does not become a non-tariff barrier to trade, utilised by Australian farmers to stop their PNG counterparts making a living. Also, more can be done to help Pacific countries meet Australian quarantine requirements. Within two decades, we should aim to be importing most of our bananas, coffee and some other primary foodstuffs from the Pacific.

The third opportunity is more obtuse and more difficult to achieve. This is doing the long term work of building institutions that facilitate a development-friendly culture. There has been really interesting research done by AusAID's Developmental Leadership Program that examines the influence of developmental elites and predatory elites. Researchers looked at recent development success stories such as Mauritius and Botswana, and asked why these countries were on the path to development while their counterparts in sub-Saharan African were mired in a cycle of poverty & conflict. What they found was that the success stories had a group of post-independence leaders ('elites') who stretched across government, business and civil society, who were largely committed to transparent and ethical leadership in service to their country. This led to a series of good public policy decisions, and the construction over time of social & economic institutions that are friendly to entrepreneurship and which exercise good stewardship over public resources. If and how these 'development elites' might be replicated in other countries is another question, however this provides a good starting point for looking at what conditions are needed to enable long-term development.

The debate about development aid needs to be had. We need to face facts that AusAID and our NGOs are failing miserably in this area. However, let's also remember that developing countries need relief aid too; surely we aren't so blind to human suffering as to deny them that?

Anna Kent:

I have been reading with interest the recent debate in the Interpreter regarding the true purpose of aid. I recently completed a Masters thesis looking at an element of our aid program that is promoted as development, but probably fits better as diplomacy: Australian Development Scholarships. While these scholarships are now part of the Australia Awards family, they are offered to prospective students from a variety of developing nations for study at Australian TAFEs and universities.

The links between aid, development and diplomacy are easy to see in the ADS, just a little below the surface (and the shiny PR). My thesis argued that the scholarships are actually a much better tool of diplomacy than development. And one could now argue that Australia's seat on the UN Security Council has been 'bought' by hundreds of these scholarships, particularly in Africa and the Caribbean. But the ongoing, long term diplomatic impact of thousands of students educated in Australia returning home to their lives thankful of the opportunities given to them by the Australian Government will also be a significant diplomatic 'win'.

But, these awards are funded by AusAID, considered Overseas Development Assistance, and one of our largest education sector programs. They are also 'aid' spent for the most part in Australia on university and TAFE fees, living allowances and other costs. And development outcomes from the scholarships are hard to track, attribute and demonstrate.

If we're looking for a good case study to start a debate about Australia's confused aid/development/diplomacy conundrum with, Development Scholarships could be a good place to start.